Last Time Tips by CA Ankit Patwari

The Bhawanipur Education Society College
CONTENT
Sr. No Particulars Page No.
1. Syllabus 2
2. Paper Pattern 3
3. Passing Criteria 3
4. Things not to forget 3
5. Cash Flow Statement 4-9
6. Fund Flow Statement 10 - 13
7. Accounting Ratio 14 – 20
8. Financial Statement Analysis 21 – 22
9. Holding Company 23 – 31
10. Past 2 Years Papers
1
CA Ankit Patwari ankit.patwari@thebges.edu.in
Financial Reporting and Financial Statement Analysis

SYLLABUS
Unit Topic Details Marks No. of
allotted lectures
1 Holding Meaning of Holding Company & Subsidiary Company;
Company Relevant Standard; Consolidation of Balance Sheets of
Parent & Subsidiary (only one); Minority Interest –
Basic principles and preparation of CBS; CBS with loss
balance of Subsidiary
Treatment for: Revaluation of Assets of Subsidiary,
Intra - group Transactions, Holding of different 15 15
securities, Consideration of dividend paid or proposed
by Subsidiary in CBS; Bonus Shares issued or proposed
to be issued by Subsidiary
(excluding shares acquired on different dates by the
Parent company, chain and cross holding)
2 Accounting Conceptual Framework, Presentation of Financial
Standards Statements (Ind AS 1), Property, Plant and Equipment 15 15
(Ind AS 16), Earnings per share (Ind AS 33), [Basic
Definitions & Theoretical Concepts, Scope]
3 Fund Flow Concept of fund, meaning, nature, various sources
Statement And applications, advantages & limitations of Fund 5
Flow Statement.
4 Cash Flow Meaning, objectives, difference with Fund Flow 20
Statement Statement; Activity classification and preparation and 15
presentation as per relevant Accounting Standard.
5 Introduction Nature and Component of Financial Statement;
to Meaning and Need for FSA, Traditional & Modern
Financial approaches to FSA, Parties interested in FSA.
Statements • Comparative Statement – meaning, preparation,
Analysis uses, merits and demerits 10 12
• Common -size Statement – meaning, preparation,
uses, merits and demerits
• Trend Analysis – meaning, determination, uses,
merits and demerits
6 Accounting Meaning, objective, Classification of Accounting
Ratios Ratios, Advantages & Limitations
for FSA Preparation of Classified Financial Statements and
Statement of Proprietor’s Fund from the given Ratios. 20 18
Computation, Analysis and Interpretation of
important ratios for measuring –Liquidity, Solvency,
Capital
Structure, Profitability and Managerial Effectiveness.
2
PAPER PATTERN
Marks in each question No. of Questions to be answered No. of Questions to be set
In Offline Mode
5 3 5
10 2 3
15 3 5
In Online Mode
15 2 4
25 2 6
Passing Criteria:
Minimum 30% marks is required to clear the Examination. In Internals 6 out off 20 is
required and in External 24 out off 80 is required.
 Passed in Internal and failed in External => Overall Fail
 Failed in Internal and Passed in External => Overall Fail
 Passed in Internal and External => Overall Pass
Things not to forget in Your Exam:

 Hard Copy of your Admit card
 College ID Card
 Stationery
 Business Calculator
 Do not carry Mobile Phones & Smart watches
 Reach the Examination Centre before 30 minutes of Scheduled time (You may get
question paper reading time of 15 minutes).
3
Cash Flow Statement

1. Compute Net Cash Flow from Operating Activities from the following:
P/L A/c as on 31.03.21 - ₹ 2, 30, 000

as on 31.03.22 - ₹ 1, 60, 000
Other transactions during the year:
Bad debt written-off ₹ 15,000; Depreciation Provided ₹ 30,000; Dividend on Investment ₹
6,000; Debenture interest paid ₹ 4,000; Preliminary expenses written-off ₹ 2,000; Tax paid ₹
14,000; Interim Dividend paid ₹ 8,000; Transfer to reserve ₹ 40,000; Old Machinery (W.D.V
18,000) sold for ₹ 20,000; Increase in Working Capital ₹ 12,000.
Solutions:
Statement Showing Computation of Net Cash Flow from Operating Activities
Particulars Amount
₹
A. Cash Flows from Operating Activities
Operating Profit before adjustment of Working Capital Changes 35,000
Less: Increase in Working Capital 12,000
Cash Generated from Operation 23,000
Less: Payment of Tax 14,000
Net Cash from Operating Activities 9,000
Workings:
Statement Showing Calculation of Operating Profit

Particulars Amount Amount
₹ ₹
Net Loss as per Statement of Profit & Loss (70000)
(2,30,000 – 1,60,000)
Add: Non-cash and Non-trading Debit Items charged to
Statement of Profit & Loss
(a) Bad debt written off 15,000
(b) Depreciation 30,000
(c) Debenture Interest 4,000
(d) Preliminary expenses written off 2,000
(e) Tax 14,000
(f) Interim dividend paid 8,000
(g) Transfer to Reserve 40,000 1,13,000
43,000
Less: Non-trading Income:
(a) Dividend on Investment 6,000
(b) Profit on sale of Old Machinery 2,000 8,000
Operating Profit 35,000
4
2. You are given the following particulars relating to the year ended 31.03.2022:
(a) Total Sales ₹ 4,23,000

(b) Cost of Goods Sold ₹ 2,12,000
(c) Expenses for the year ₹ 35,000
(d) Position of Current assets and liabilities:
31.03.2021 31.03.2022
Debtors ₹ 1,24,000 ₹ 89,000
Inventory ₹ 1,03,000 ₹ 1,19,000
Prepaid Expenses ₹ 21,000 ₹ 15,000
Creditors ₹ 94,000 ₹ 1,65,000
Ascertain Cash from Operation for the year 2021-22.
Solution:
Statement showing calculation of Cash from Operation

₹ ₹
Total Sales 4,23,000
Less: Cost of Goods Sold 2,12,000
Expenses for the year 35,000 2,47,000
Operating profit 1,76,000
Add: Increase In Current Liabilities:
Creditors ₹ (1,65,000 – 94,000) 71,000
Add: Decrease in Current Assets:
Debtors ₹ (1,24,000 – 89,000) 35,000
Prepaid Expenses ₹ (21,000 – 15,000) 6,000 1,12,000
2,88,000
Less: Increase in Current assets:
Inventory ₹ (1,19,000 – 1,03,000) 16,000
Cash from Operations 2,72,000
5
3. The following are the Summarised Balance Sheets of XY Ltd. As on 31.03.2021 and
31.03.2022:
Particulars Note 31.03.2021 31.03.2022

No.
₹ ₹
I. EQUITY AND LIABILITIES:
1. Shareholder’s Fund:
(a) Share Capital 9,20,000 9,20,000
(b) Surplus 1 3,04,000 3,32,000
2. Non-current Liabilities:
Long-term Borrowings (8% Debentures) 3,60,000 2,80,000
3. Current Liabilities:
(a) Trade Payable (Creditors) 4,12,000 3,84,000
(b) Other Current liabilities (Outstanding Expenses) 52,000 48,000
20,48,000 19,64,000
II. ASSETS:
1. Non-current Assets :
(a) Property, Plant & Equipment – Tangible Assets 2 6,48,000 7,04,000
(b) Non-current Investments (Investment) 4,40,000 2,96,000
2. Current Assets:
(a) Inventories (stock) 3,28,000 4,24,000
(b) Trade Receivables (Debtors) 2,68,000 1,72,000
(c) Cash and Cash Equivalent (Cash at Bank) 3,60,000 3,60,000
(d) Other Current Assets (Prepaid Expenses) 4,000 8,000
20,48,000 19,64,000
Notes to Accounts:
Particulars 31.3.21 31.3.22
₹ ₹
1. Surplus
(a) Reserve 2,40,000 2,40,000
(b) Balance in the Statement of Profit and Loss 64,000 92,000
3,04,000 3,32,000
2. Property, Plant & Equipment – Tangible Assets:

(a) Land and Building 6,00,000 6,00,000
(b) Machinery 2,08,000 2,80,000
1,60,000 1,76,000
Less: Depreciation (Accumulated)
48,000 1,04,000
Total (a + b)
6,48,000 7,94,000
6
Additional Information:
(a) 10% dividend was paid during 2021-22.
(b) Machinery for Rs 1,20,000 was purchased and old machinery costing 48,000
(accumulated depreciation Rs 24,000) was sold for Rs 16,000.
(c) 80,000, 8% Debentures were redeemed by purchase from open market at 96 for a
debenture of 100, at the beginning of the year.
(d) Investments worth Rs 1,44,000 were sold at book value.
(e) Bad debts written off during the year Rs 20,000.
Prepare a statement of Cash Flow as per Ind AS-7 for the year ended on 31.3.22.
Solution:
XY Ltd.
Cash Flow Statement
for the year ended: 31.03.2022
Particulars Amount Amount Amount

₹ ₹ ₹
A. Cash Flows from Operating Activities:
Operating Profit before adjustment of working
capital changes 2,07,200
Add: Decrease in Trade Receivables 2,68,000 – (1,72,000 +
20000) 76,000
2,83,200
Less: Decrease in Current Liabilities and Increase in Current
Assets:
(a) Trade Payables (4,12,000 – 3,84,000) 28,000
(b) Outstanding Expenses (52,000 – 48,000) 4,000
(c) Inventories (3,28,000 – 4,24,000) 96,000
(d) Prepaid Expenses (4000 – 8000) 4,000 1,32,000
Cash Generated from Operations 1,51,200
Less: Income Tax Paid NIL
Net cash from Operating Activities 1,51,200
B. Cash Flows from Investing Activities:
Sale of machinery 16,000
Sale of Investment 1,44,000
1,60,000
Less: Purchase of Machinery 1,20,000
Net cash from Investing Activities 40,000
C. Cash Flows from Financing Activities:
Redemption of Debenture 76,800
Payment of Dividend 92,000
7
Payment of Interest on Debenture 22,400

Net cash used in Financing Activities (1,91,200)
Net Increase/ Decrease in Cash/ Cash Equivalents NIL
Add: Cash and Cash Equivalents in the beginning of the year 3,60,000
Cash and Cash Equivalents at the end of the year 3,60,000
Dr. Machinery Account Cr.

Particulars Amount Particulars Amount
₹ ₹
To Balance b/f 2,08,000 By Bank A/c 16,000
- Sale Proceed
To Bank A/c 1,20,000 By Statement of Adjusted
- Purchase Profit & Loss – Loss on Sale 8,000
Provision for Depreciation 24,000
By Balance c/f 2,80,000
3,28,000 3,28,000
Dr. Provision for Depreciation Account Cr.

₹ ₹
To Machinery A/c 24,000 By Balance b/f 1,60,000
- Accumulated By Statement of Adjusted Profit & 40,000
depreciation on Loss (Balancing)
machinery sold
To Balance c/f 1,76,000
2,00,000 2,00,000
Dr. Non-Current Investment Account Cr.

₹ ₹
To Balance b/f 4,40,000 By Bank A/c 1,44,000
- Sale Proceed
4,40,000 4,40,000
Dr. 8% Debentures Account Cr.

Particulars Amount (₹) Particulars Amount (₹)
To Own Debenture A/c 80,000 By Balance b/f 3,60,000
To Balance c/f 2,80,000
3,60,000 3,60,000
8
Dr. Machinery Account Cr.

₹ ₹
To Bank A/c 76,800 By 8% Debentures A/c 80,000
- Redemption
To Statement of Profit & Loss 3,200
- Profit on Redemption
80,000 80,000
Statement of Adjusted Profit & Loss
₹ ₹
Net Profit as per Statement of Profit & Loss 28,000
Add: Non-cash and Non-Trading Expenses:
(a) Loss on Sale of Machinery 8,000
(b) Depreciation 40,000
(c) Interest on Debentures 22,400
(d) Dividend 92,000
(e) Bad Debts 20,000 1,82,000
2,10,400
Less: Non-Trading Income:
Profit on Redemption 3,200
Operating Profit 2,07,200
9
Fund Flow Statement

1. Find out the funds from operations from the following data:
Opening balance of Profit & Loss A/c – ₹ 60,000
Closing balance of Profit & Loss A/c – ₹ 30,000
Written down value of the motor car ₹ 14,000 which was sold for ₹ 18,000, Purchase of
Machinery ₹ 20,000, Interim Dividend paid ₹ 20,000, Proposed dividend ₹ 30,000. Depreciation ₹
50,000, Preliminary expenses written off ₹ 1,000, Loss on Sale of Machinery ₹ 3,000, Transfer of
Reserve ₹ 5,000, Sinking Fund ₹ 10,000, Salaries paid ₹ 3,000, Tax paid ₹ 5,000
Solution:
Statement showing Calculation of Fund from Operation
Particulars Amount (₹) Amount (₹)

Net Loss as per Statement of Profit & Loss (30,000)
[60,000 – 30,000]
Add: Non-Cash and Non-Trading Debit Items charged to
Statement of Profit & Loss:
(a) Interim Dividend paid 20,000
(b) Proposed dividend 30,000
(c) Preliminary expenses written off 1,000
(d) Depreciation 50,000
(e) Loss on Sale of Machinery 3,000
(f) Transfer to Reserve 5,000
(g) Transfer to Sinking Fund 10,000
(h) Tax paid 5,000 1,24,000
Less: Non-Trading Income: 94,000
Profit on sale of Motor Car (18,000 – 14,000) 4,000
Fund from Operation 90,000
2. Following are the liabilities and assets of Andhra Ltd. as on 31.03.2021 and
31.03.2022:
Particulars 31.03.2021 31.03.2022

₹ ₹
1. Shareholder’s Funds:
(a) Share capital
Equity Shares of ₹10 each fully paid 8,00,000 10,00,000
(b) Surplus:
Securities Premium 1,00,000 1,20,000
General Reserve 3,60,000 4,40,000
Profit and Loss Balance 2,20,000 2,96,000
2. Non-current Liabilities:
(a) Long-term Borrowings (Bank Loan) 4,20,000 4,60,000
10
(a) Trade Payables 1,66,000 2,16,000
(b) Provision for Tax 2,00,000 2,10,000
Total 22,66,000 27,42,000
II. ASSETS:
1. Non-current Assets:
(a) Property, Plant and Equipment 17,00,000 20,60,000
(b) Non-current Investment 96,000 1,24,000
2. Current Assets:
(a) Inventories 2,40,000 2,80,000
(b) Trade Receivables 1,60,000 1,90,000
(c) Cash and Cash Equivalents 70,000 88,000
Total 22,66,000 27,42,000
Following further particulars for the year 2021-2022 are also given:
i. Dividend paid during the year ₹75,000.
ii. The company sold part of the property, Plant and Equipment for ₹24,000 (W.D.V
₹20,000). Depreciation charged on Property, Plant and Equipment during the year
₹1,40,000.
iii. Investment costing ₹16,000 were sold during the year for ₹19,000.
iv. Interest on Investment received ₹7,000 and credited to Statement of Profit & Loss.
v. Interest accrued and paid during the year on Bank Loan ₹24,000.
vi. Income tax provided during the year ₹1,98,000.
You are required to prepare:
a. The schedule of changes in working capital from 31.03.2021 to 31.03.2022 and

b. The Fund Flow Statement of Andhra Ltd. for the year ended 31.03.2022.
Solution:
Statement of Changes in Working Capital
Particulars 31.03.2021 31.03.2022 Effect on Working Capital

Increase Decrease
₹ ₹ ₹ ₹
A. Current Assets:
Inventories 2,40,000 2,80,000 40,000 -
Trade Receivables 1,60,000 1,90,000 30,000
Cash and Cash Equivalents 70,000 88,000 18,000
4,70,0000 5,58,000
B. Current Liabilities
Trade Payables 1,66,000 2,16,000 - 50,000
11
1,66,000 2,16,000
C. Working Capital (A – B) 3,04,000 3,42,000
D. Increase in Working Capital 38,000 38,000
3,42,000 3,42,000 88,000 88,000
Fund Flow Statement
For the year ended: 31.03.2022
Sources Amount (₹) Applications Amount (₹)

Purchase of Property, Plant and
Proceed from issue of shares 2,20,000 Equipment 5,30,000
Purchase of Non-current Current
Fund from operations 5,79,000 Investment 44000
Sale proceed of Property, Plant &
Equipment 24,000 Payment of Interest on Bank Loan 24,000
Sale proceeds of Investment 19,000 Payment of Tax 1,88,000
Interest on Investment received 7,000 Payment of Dividend 75,000
Bank Loan raised 40,000 Increase in working Capital 38,000
8,89,000 8,89,000
Workings:
Dr. Property, Plant & Equipment Account Cr.
Amount
Particulars (₹) Particulars Amount (₹)
To Balance b/f 17,00,000 By Depreciation A/c 1,40,000

To Statement of Profit & Loss A/c -
Profit on Sale 4,000 By Bank A/c — Sale Proceed 24,000
To Bank A/c — (Balancing) 5,20,000 By Balance c/f 20,60,000
22,24,000 22,24,000
Dr. Non-current Investment Account Cr.

₹ ₹
To Balance b/f 96,000 By Bank A/c - Sale Proceed 19,000
To Statement of Adjusted Profit &
Loss – Profit & Sale 3,000
To Bank A/c -- Purchase (Balancing) 44,000
1,43,000 1,43,000
12
Dr. Provision for Tax Account Cr.

Particulars Amount (₹) Particulars Amount (₹)
To Bank A/c 1,88,000 By Balance b/f 2,00,000
-- Payment of tax (Balancing)
To Balance c/f 2,10,000 By Statement of adjusted Profit

& Loss 1,98,000
-- Income Tax Provided
3,98,000 3,98,000
Statement Showing Computation of Fund from Operation
Particulars Details (₹) Amount (₹)

Net Profit as per Statement of Profit & Loss (2,96,000 – 2,20,000) 76,000
Add: Non-cash and Non- trading Debit Items Charged to
Statement of Profit & Loss:
(a) Transfer to General Reserve (4,40,000 – 3,60,000) 80,000
(b) Depreciation on Property, Plant & Equipment 1,40,000
(c) Dividend paid 75,000
(d) Income tax Provided 1,98,000
(e) Interest on Bank Loan 24,000 5,17,000
5,93,000
Less: Non- trading Income:
Profit on sale of fixed assets 4,000
Profit on sale of Investment 3,000
Interest on Investment 7,000 14,000
Fund from Operation 5,79,000
13
Accounting Ratio
1. From the following information you are required to calculate the (a) Debtors Turnover
Ratio and average Collection Period; (b) Creditors Turnover Ratio and average Payment
Period, and (c) Stock Turnover Ratio.
₹
Credit Sales 12,00,000
Cash Sales 3,00,000
Rate of Gross Profit @ 20% --
Opening Stock 1,00,000

Closing Stock 2,20,000
Credit Purchase – 1.5 times of Cash Purchase

Opening Debtors 2,80,000
Closing Debtors 2,20,000
Opening Creditors 2,90,000
Closing Creditors 3,43,600
Solution:
(i) Statement showing calculation of Cost of Goods Sold and Total Purchase:
Particulars Amount
(₹)
Cash Sales 3,00,000
Add: Credit Sales 12,00,000
Total Sales 15,00,000
Less: Gross Profit @ 20% 3,00,000
Cost of Goods Sold 12,00,000
Add: Closing Stock 2,20,000
14,20,000
Less: Opening Stock
1,00,000
Total Purchase
13,20,000
(ii) Calculation of Cash Purchase and Credit Purchase.

Let the Cash Purchase be ₹ x & Credit Purchase be ₹ 1.5x
14
According to Problem
Cash Purchase + Credit Purchase = ₹ 13,20,000
x + 1.5x = ₹ 13,20,000
or, 2.5x = ₹ 13,20,000

13,20,000
∴ x =₹ 2.5
= ₹ 5,28,000
So, the amount of Cash Purchase = ₹ 5,28,000
And the amount of Credit Purchase = 1.5 × ₹ 5,28,000 = ₹ 7,92,000

(iii) Calculation of Average Debtors and Average Creditors:
𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝐷𝑒𝑏𝑡𝑜𝑟𝑠+𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝐷𝑒𝑏𝑡𝑜𝑟𝑠
Average Debtors =
2
2,80,000+2,20,000 5,00,000
= = = ₹ 2,50,000
2 2
𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝐶𝑟𝑒𝑑𝑖𝑡𝑜𝑟𝑠+𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝐶𝑟𝑒𝑑𝑖𝑡𝑜𝑟𝑠
And Average Creditors =
2
2,90,000+3,43,600 6,33,600
= = = ₹ 3,16,800
2 2
𝐶𝑟𝑒𝑑𝑖𝑡 𝑆𝑎𝑙𝑒𝑠
(a) Debtors Turnover Ratio =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐷𝑒𝑏𝑡𝑜𝑟𝑠
12,00,000
=
2,50,000
= 4.8 times
12 𝑚𝑜𝑛𝑡ℎ𝑠
And Average Collection Period =
𝐷𝑒𝑏𝑡𝑜𝑟𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜
=
4.8
= 2.5 months
𝐶𝑟𝑒𝑑𝑖𝑡 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒
(b) Creditors Turnover Ratio =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐶𝑟𝑒𝑑𝑖𝑡𝑜𝑟𝑠
₹ 7,92,000
=
₹ 3,16,800
= 2.5 times
and Average Payment Period 12 months:
=
𝐶𝑟𝑒𝑑𝑖𝑡𝑜𝑟𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜
15
=
2.5
= 4.8 months
365 𝐷𝑎𝑦𝑠
(Or) APP =
𝐶𝑟𝑒𝑑𝑖𝑡𝑜𝑟𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜
365 𝑑𝑎𝑦𝑠
=
2.5
= 146 Days
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
(c) Stock Turnover Ratio =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑆𝑡𝑜𝑐𝑘
₹ 12,00,000
= ₹ 1,00,000 + ₹2,20,000
2
₹ 12,00,000
=
₹ 1,60,000
= 7.5 times
2. From the following Balance Sheet, calculate (a) Capital Turnover Ratio; (b) Fixed Assets
Turnover Ratio; (c) Total Assets Turnover Ratio; (d) Working Capital Turnover Ratio.
Particulars Note No. Amount (₹)

1. Shareholders’ Funds:
(a) Share Capital 1 3,00,000
(b) Surplus 2 90,000
2. Non-current Liabilities: 1,50,000
(a) Long-term Borrowings 3 1,50,000
(a) Short-term Borrowings (Bank Overdraft) 50,000
(b) Trade Payables (Creditors) 1,00,000
Total 6,90,000
II. Assets:
(a) Property, Plant and Equipment-Tangible Assets 4 4,00,000
2. Current Assets:
(a) Inventories (Stock) 1,50,000
(b) Trade Receivables (Debtors) 50,000
(c) Cash and Cash Equivalents (Cash) 90,000
Total
6,90,000
16
Notes to Accounts:
Particulars Amount (₹)

1. Share Capital:
(a) Subscribed Capital
Equity Share Capital of ₹ 10 each 2,00,000
6% Preference Share Capital 1,00,000
3,00,000
2. Surplus:
Gross 1,00,000
Less: Miscellaneous Expenditure 10,000
90,000
3. Long-term Borrowings:
(a) 8% Debentures 1,00,000
(b) Long term Loan 50,000
1,50,000
4. Property, Plant and Equipment – Tangible Assets:
(a) Plant and Machinery 2,00,000
(b) Land and Building 2,00,000
4,00,000
Sales for the year ₹ 32,90,000; Sales Return ₹ 50,000
Solution:
Capital Employed = Equity Share Capital + 6% Preference Share Capital + Gross Profit –
Miscellaneous Expenditure + 8% Debentures + Long-term Loan
= ₹ 2,00,000 + ₹ 1,00,000 + ₹ 1,00,000 – ₹ 10,000 + ₹ 1,00,000 + ₹ 50,000
= ₹ 5,40,000
And Net Sales = Sales – Sales Return

= ₹ 32,90,000 - ₹ 50,000
= ₹ 32,40,000
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
∴ Capital Turnover Ratio =
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑
32,40,000
=₹
5,40,000
= 6 times
(b) Fixed Assets Turnover Ratio =
𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠
Where, Fixed Assets = Plant and Machinery + Land and Building

= ₹ 2,00,000 + ₹ 2,00,000
17
= ₹ 4,00,000
32,40,000
∴ Fixed Assets Turnover Ratio = ₹
4,00,000
= 8.1 times
(c) Total Assets Turnover Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝐿𝑒𝑠𝑠 𝐹𝑖𝑐𝑡𝑖𝑡𝑖𝑜𝑢𝑠 𝐴𝑠𝑠𝑒𝑡𝑠
32,40,000
=₹ 6,90,000
= 4.696 i.e. 4.7 times

(d) Working Capital Turnover Ratio =
𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙
Where, Working Capital = Total Current Assets – Total Current Liabilities

= Stock + Debtors + Cash – Bank Overdraft – Creditors
= ₹ (1,50,000 + 50,000 + 90,000 – 50,000 – 1,00,000)

= ₹ 1,40,000
₹ 32,40,000
Working Capital Turnover Ratio = = 23.14 times
₹ 1,40,000
3. From the following information, prepare a Balance Sheet in the books of X Ltd. as at
31.03.2022 assuming the capital is composed of Equity Shares of Rs 10 each.
(i) Liquid Ratio 1.5

(ii) Current Ratio 2.5
(iii) Fixed Assets to Proprietorship Fund Ratio 0.75
(iv) Working Capital Rs 1,20,000
(v) Surplus Rs 60,000
(vi) Bank Overdraft Rs 20,000
(vii) Gearing Ratio 5: 1
(Preference share Capital to Equity Share Capital)
18
Solution:
X Ltd.
Balance Sheet
as at 31.03.2022
Particulars Note No. Amount

₹

(a) Share Capital 4,20,000
(b) Surplus 60,000
(a) Short term Borrowings (Bank Overdraft) 60,000
(b) Other Current Liabilities 20,000
Total 5,60,000
II. ASSETS:
1. Non-Current Assets:
(a) Property, Plant and Equipment
2. Current Assets: 3,60,000
(a) Inventories
(b) Other Current Assets 1,10,000
Total 90,000
5,60,000
Workings:
(i) Calculation of Total Current Assets and Total Current Liabilities:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 (𝐶𝐴)
Current Ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 (𝐶𝐿)
Or, 2.5 = CA/CL

Or, CA = 2.5 CL
Now, Working Capital = CA – CL

Or, Rs 1,20,000 = 2.5 CL – CL
Or, Rs 1,20,000 = 1.5 CL
CL = Rs 1,20,000/1.5 = Rs 80,000
So, Current Liabilities = Rs 80,000 and Current Assets = 2.5 CL = 2.5 × Rs 80,000 = Rs
2,00,000
(ii) Calculation of Value of Stock and Other Current Assets:
19
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠−𝑠𝑡𝑜𝑐𝑘
Liquid Ration =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑒𝑠 − 𝐵𝑎𝑛𝑘 𝑂𝑣𝑒𝑟𝑑𝑟𝑎𝑓𝑡
𝑅𝑠 2,00,000−𝑆𝑡𝑜𝑐𝑘
Or, 1.5 =
𝑅𝑠 80,000−𝑅𝑠 20,000
𝑅𝑠 2,00,000−𝑆𝑡𝑜𝑐𝑘
Or, 1.5 =
𝑅𝑠 60,000
Or, 1.5 × Rs 60,000 = Rs 2,00,000 – Stock

Or, Rs 90,000 = Rs 2,00,000 – Stock
Stock = Rs 2,00,000 – Rs 90,000 = Rs 1,10,000

And other Current Assets = Rs 2,00,000 – Rs 1,10,000 = Rs 90,000
(iii) Calculation of Proprietor Fund and Fixed Assets:
FA/PF = 0.75
𝐹𝐴
Or, = 0.75
𝐹𝐴+𝑊.𝐶
𝐹𝐴
Or, = 0.75
𝐹.𝐴+𝑅𝑠 1,20,000
Or, FA = 0.75(FA + Rs 1,20,000)

Or, FA = 0.75FA + Rs 90,000
Or, 0.25 FA = Rs 90,000
FA = Rs 90,000/0.25 = Rs 3,60,000
And Proprietors Fund = F.A. + WC = Rs 3,60,000 + Rs 1,20,000 = Rs 4,80,000
iv) Calculation of Share Capital:
Surplus = ₹ 60,000
And Share Capital = Proprietor’s Fund – Surplus

= ₹ 4,80,000 - ₹ 60,000
= ₹ 4,20,000
v) Calculation of Other Current Liabilities:

Other Current Liabilities = Total Current Liabilities – Bank Overdraft
= ₹ 80,000 - ₹ 60,000
= ₹ 20,000
20
Financial Statement Analysis
1. From the following information prepare a comparative Income Statement:
Particulars 2021 2022

₹ ₹
Sales 3,75,000 5,25,000
Cost of Goods Sold 3,00,000 3,75,000
Administrative, Selling and Distribution Expenses 22,500 30,000
Other Income 7,500 15,000
Income Tax 50% 50%
Solution:
Comparative Income Statement For the Year ended: 2021 & 2022
Particulars 2021 2022 Absolute Percentage

Change Change
₹ ₹ ₹ %
I. Revenue from Operations 3,75,000 5,25,000 1,50,000 40
II. Other Income 7,500 15,000 7,500 100
III. Total Revenue (I + II) 3,82,500 5,40,000 1,57,500 41.18
IV. Expenses:
(a) Cost of Goods sold 3,00,000 3,75,000 75,000 25
(b) Other Expenses: 22,500 30,000 7,500 33.33
(Administrative Selling and
Distribution Expenses)
Total Expenses 3,22,500 4,05,000 82,500 25.58
V. Profit before Tax (III – IV) 60,000 1,35,000 75,000 125

VI. Income Tax @ 50% 30,000 67,500 37,500 125
VII. Profit After Tax (V – VI) 30,000 67,500 37,500 125
21
2. With the help of the following information for the year ended 31.03.2017, prepare a Common-size
Income Statement.
Particulars Small Bros.

Office and Selling and Distribution Expenses ₹ 60,000
Other Income ₹ 20,000
Total Cost of Sales: 75% of Net Sales -
Net Profit before Tax ₹ 1,20,000
Solution:
Common-size Income Statement For the year ended: 31st March, 2021
Particulars Absolute Percentage of

Amount (₹) Sales (%)
I. Revenue from Operations (Net Sales) 4,00,000 100
II. Other Income 20,000 5
III. Total Revenue (I + II) 4,20,000 105

IV. Expenses
(a) Cost of Goods Sold 2,40,000 60
(b) Other Expenses (Office and Selling & Distribution 60,000 15
Expenses)
Total Expenses 3,00,000 75
V. PBT (III – IV) 1,20,000 30

Working: (i) Statement Showing Calculation of Operating Profit and Net Sales
Particulars ₹
PBT 1,20,000
Less: Other Income 20,000
Operating Profit 1,00,000
100
∴ Net Sales = 1,00,000 × 4,00,000
25
Now, Total cost of Sales = 75% of ₹ 4,00,000 = ₹ 3,00,000
Office and selling & Distribution Expenses = ₹ 60,000
∴ Production cost of Sales/Cost of Goods Sold = ₹ 3,00,000 - ₹ 60,000 = ₹ 2,40,000.
22
Holding Company
1. The Balance Sheet of Giant Ltd. and Liliput Ltd. as on 31.03.2022 were as follows:
Particulars Giant Ltd. Liliput Ltd.

₹ ₹
I. Equity and Liabilities:
(a) Share Capital (Equity Shares of ₹ 10 each) 9,00,000 3,00,000
(b) Surplus:
General Reserve 5,00,000 30,000
Profit and Loss Balance 6,00,000 2,00,000
(a) Trade Payables (Sundry Creditors) 1,00,000 1,70,000
Total 21,00,000 7,00,000
II. Assets:
(a) Property, Plant and Equipment 9,00,000 4,00,000
(b) Non-current Investments 6,00,000 -
2. Current Assets:
(a) Inventories 2,10,000 1,20,000
(b) Trade Receivables (Sundry Debtors) 1.60,000 90,000
(c) Cash and Cash Equivalents (Cash and Bank) 2,30,000 90,000
Total 21,00,000 7,00,000
Giant Ltd. has acquired 75% of shares of Liliput Ltd. at ₹ 6,00,000 on 1st July, 2021. Liliput Ltd.
had a balance of ₹ 1,00,000 in Profit and Loss Balance on 1st April, 2021 from which it paid
dividend for 2021-20 @ 20% on 30th September, 2021. The dividend received by Giant Ltd. is
included in its Profit and Loss Balance. Inventories of Giant Ltd. includes ₹ 20,000 out of
purchase of ₹ 50,000 made from Liliput Ltd. in January 2022 and no payment on this account
has been made by Giant Ltd. to Liliput Ltd. till 31st March 2021. Liliput Ltd. had sold these
items at a margin of 25% on cost. There has been no change in the General Reserve Account
of Liliput Ltd. during 2021-20. Prepare Consolidated Balance Sheet on 31st March 2022.
23
Solution:
Consolidated Balance Sheet of Giant Ltd. with its Subsidiary Liliput Ltd.
as at 31st March, 2022
Particulars Note No Amount

₹
I. EQUITY AND LIABILITIES
1. Shareholders Funds:
(a) Share Capital (Equity Share of ₹10 each) 9,00,000
(b) Surplus 1 11,41,000
2. Minority Interest 2 1,32,500
3. Share Application Money Rending Allotment NIL
4. Non-current Liabilities NIL
(a) Trade Payables 3 2,20,000
Total 23,93,500
II. ASSETS:
(a) Property, Plant and Equipment
(i) Tangible Assets 13,00,000
(ii) Intangible Assets 2,47,500
(b) Non-current Investment NIL
2. Current Assets:
(a) Inventories 3,26,000
(b) Trade Receivables 2,00,000
(c) Cash and cash Equivalents 3,20,000
Total 23,93,500
24
Notes to Accounts:
Particulars Amount
₹
1. Reserves and Surplus:
(a) General Reserve (Giant LTD.) 5,00,000
(b) Profit and Loss Balance 6,41,000
11,41,000
2. Minority Interest:
(a) Face value of Shares held ¼ ∗ 3,00,000 75,000
(b) Share of Capital Profit 27,500
(c) Share of Revenue Profit 30,000
1,32,500
3. Trade Payables:
(a) Sundry Creditors:
Giant Ltd. 1,00,000
Liliput Ltd. 1,70,000
2,70,000
Less: Mutual Indebtedness 50,000
2,20,000
4. Property, Plant and Equipment – Tangible
Giant Ltd. 9,00,000
13,00,000
5. Property, Plant and Equipment – Intangible
Goodwill 2,47,500
6. Inventories:
Giant Ltd. 2,10,000
3,30,000
Less: Unrealised Profit on Stock 4,000
3,26,000
7. Trade Receivables:
(a) Sundry Debtors:
Giant Ltd. 1,60,000
Liliput Ltd. 90,000
2,50,000
Less: Mutual Indebtedness 50,000
2,00,000
8. Cash and Cash Equivalents:
Giant Ltd. 2,30,000
Lilliput Ltd. 90,000
3,20,000
25
Working Note:
Step 1: Share of Holding Co. = 75% = ¾ and Share of minority = 1- ¾ = ¼
Step 2: Analysis of Profits and Reserve:
Particulars Capital Profit Revenue Profit

₹ ₹
1. General Reserve 30,000 --
2. Profit and Loss Balance:
As on 1.4.2021 1,00,000
Less: Pre-acquisition dividend @20% 60,000
40,000
Add: Profit for the period upto 1.7.19 40,000 80,000
3
12
As per Balance Sheet
Less: Balance on as 1.7.19 1,20,000
Less: Share of Minority (¼) 1,10,000 1,20,000
Share of Holding Co. (¾) 27,500 30,000

82,500 90,000
Step 3: Cost of Capital or Goodwill/Capital Reserve: ₹

Cost of acquisitions of Shares 6,00,000
Less: Face value of Shares held 2,25,000
“ Share of capital Profit 82,500
“ Share of Pre-acquisition dividend wrongly credited in
Statement of Profit and Loss ¾* 60,000 45,000 3,52,500
Amount of Goodwill 2,47,500
Step 4: Calculation of unrealised profit on stock:

25
Unrealised Profit on Stock = 125
∗ ₹ 20,000 = ₹ 40,000
Step 5: Consolidated Profit and Loss Balance:
Profit and Loss Balance Gisnt Ltd. 6,00,000

Add: Share of Revenue Profit from Giant Ltd. 90,000
6,90,000
Less: Unrealised profit on stock 4,000
Share of Pre-acquisitions Dividend wrongly credited to
Statement of Profit and Loss 45,000 49,000
6,41,000
26
2. The following are the statements of assets and liabilities of Ambani Ltd. And Adani Ltd. As on
31.03.2022:
Particulars Note Ambani Ltd. Adani Ltd.

No. (₹) (₹)
I. EQUITY AND LIABILITIES
(a) Share Capital 30,00,000 10,00,000
(b) Surplus 1 35,00,000 7,60,000
(a) Trade Payables 2 3,00,000 3,22,000
Total 68,00,000 20,82,000
II. ASSETS:
1. Non-Current Assets:
(a) Property, Plant and Equipment – Tangible 3 26,60,000 12,62,000
Assets
(b) Non- Current Investments 4 18,60,000 70,000
2. Current Assets:
(a) Inventories (Stock) 6,80,000 4,04,000
(b) Trade Receivables 12,00,000 3,16,000
(c) Cash and Cash Equivalents (Cash at Bank) 4,00,000 30,000
Total 68,00,000 20,82,000
Notes to Accounts:
Particulars Ambani Ltd. (₹) Adani Ltd. (₹)

1. Surplus:
(a) Reserve 19,00,000 40,000
(b) Balance in the Statement of profit and loss 16,00,000 7,20,000
35,00,000 7,60,000
2. Trade Payables:
(a) Current A/c with Adani Ltd. 36,000 --
(b) Sundry Creditors 2,64,000 3,22,000
3,00,000 3,22,000
(a) Land and Buildings 20,60,000 7,20,000
(b) Machinery 6,00,000 5,42,000
26,60,000 12,62,000
4. Non-current Investments:
(a) Investment in Shares of Adani Ltd. 16,00,000 --
(b) Other Investments 2,60,000 70,000
18,60,000 70,000
(a) Sundry Debtors 12,00,000 2,76,000
(b) Current A/c with Ambani Ltd. -- 40,000
12,00,000 3,16,000
27
Other Particulars:
(a) Ambani Ltd. acquired 80% shares of Adani Ltd. on 1.7.19. On 1.4.2021, the Reserve and
Statement of Profit and Loss of Adani Ltd. were 20,000 and 4,00,000 respectively.
(b) Land and Buildings standing in the books of Adani Ltd. at 8,00,000 on 1.4.2021 were revalued at
7,60,000 at the date of acquisition, but it was not passed in the books.
(c) Adani Ltd. declared and paid 20% dividend for the year 2020-21 in July 2021 and Ambani Ltd.
credited the entire amount of dividend received from Adani Ltd. to its Statement of Profit and Loss.
(d) Stock of Ambani Ltd. includes 60,000 goods purchased from Adani Ltd.
(e) Sundry Creditors of Ambani Ltd. includes 1,20,000 purchased from Adani Ltd. on which Adani Ltd.
Made a profit of 30,000.
(f) On 31.3.2022, Ambani Ltd. remitted a cheque 4,000 on Current A/c to Adani Ltd.
From the above information prepare a Consolidated Balance Sheet of Ambani Ltd. and its subsidiary
Adani Ltd. as on 31.03.2022.
Solution:
Consolidated Balance Sheet of Ambani Ltd. with its subsidiary Adani Ltd.
as at: 31.03.2022
Particulars Note no. Amount (₹)

(a) Share Capital 30,00,000
(b) Surplus 1 36,51,400
2. Minority Interest 2 3,48,600
3. Share Application Money Pending Allotment NIL
4. Non-current Liabilities NIL
(a) Trade payables 3 4,66,000
Total 74,66,000
II. ASSETS:
(a) Property, Plant and Equipment-
(i) Tangible Assets 4 39,05,000
(ii) Intangible Assets 5 3,72,000
(b) Non-current Investment 6 3,30,000
2. Current Assets:
(a) Inventories (Stock) 7 10,69,000
(b) Trade Receivables 8 13,56,000
(c) Cash and Cash Equivalents 9 4,34,000
Total
74,66,000
28
Note to Accounts:
Particulars Amount (₹)
1. Surplus:
(i) Reserve (See W.N. No 7) 19,12,000
(ii) Statement of Profit & Loss (See W.N. No. 6) 17,39,400
35,51,000
2. Minority Interest (Se W.N. No. 4) 3,48,600
3. Trade Payables:
(a) Sundry Creditors (See W.N. No. 8) 4,66,000
(i) Land & Building (See W.N. No. 8)
27,63,000
(ii) Machinery
11,42,000
39,05,000
(a) Goodwill (See W.N. No. 3) 3,72,000
6. Non-current Investment:
(a) Other Investment (See W.N. No. 8) 3,30,000
7. Inventories:
(a) Stock (See W.N. No. 8) 10,69,000
(a) Sundry Debtors (See W.N. No. 8) 13,56,000
9. Cash and Cash Equivalents (See W.N. No. 8) 4,34,000
Workings:
Step 1: Share of Holding Co. = 80/100 = 4/5, Share of Minority = 1 – 4/5 = 1/5
Step 2: Analysis of Profit:
Particulars Capital Profit Revenue Profit Revenue

Reserve
₹ ₹ ₹ ₹
1. Reserve:
As on 1.4.21 20,000
Add: Transferred to Reserve for the period
3
1.4.21 to 1.7.21 (40,000 − 20,000) 5,000 25,000
12
Reserve as per Balance Sheet 40,000
Less: Balance upto the date of acquisition 25,000 15,000
2. Statement of Profit & Loss:
As on 1.4.21 4,00,000
Less: Pre-acquisition Dividend 2,00,000
2,00,000
Add: Balance of Statement of Profit & Loss 3,30,000
Increased for the period 1.4.21 to 1.7.21 1,30,000
3
(7,20,000 – 2,00,000) ×
12
Statement of Profit & Loss As per 7,20,000
Balance Sheet
Less: Balance as on the date of acquisition 3,30,000 3,90,000
Less: Decrease in the value of Land & Building (-) 20,000
29
Add: Depreciation on Land & Building over

charged 3,000
3,35,000 3,93,000 15,000
Less: Minority Interest (1/5) 67,000 78,600 3,000
Share of Holding Co. 2,68,000 3,14,400 12,000
₹8,00,000−₹7,20,000
[ Note: (a) Rate of Depreciation = × 100
₹8,00,000
₹80,000
=( ) × 100 = 10%
₹8,00,000
10 3
(b) Over valuation of Land & Building (₹ 8,00,000 – 100 × ₹8,00,000 × )-₹
15
7,60,000
= (₹ 8,00,000 - ₹ 20,000) - ₹ 7,60,000
= ₹ 7,80,000 - ₹7,60,000 = ₹ 20,0000
(c) Depreciation overcharged on Land & Building
10 10 9
Depreciation Overcharged = ₹ 8,00,000 × 100 × 9 − ₹7,60,000 × ×
12 100 12
= ₹ 60,000 - ₹ 57000 = ₹ 3,000]
Step 3: Cost of Control or Goodwill/Capital Reserve
₹ ₹
Cost of acquisition of shares 16,00,000
Less: Face Value of Shares 8,00,000
Less: Share of Capital Profit 2,68,000
Less: Share of Pre-acquisition dividend of Ambani Ltd. wrongly
credited to Statement of Profit & Loss
4
2,00,000 × 1,60,000 12,28,000
5
Amount of Goodwill 3,72,000
Step 4: Minority Interest
(i) Face Value of Shares 1 × ₹10,00,000 2,00,000

5
Add: Share of Capital Profit 67,000
Share of Revenue Profit 78,600
Share of Revenue Reserve 3,000
3,48,600
Step 5: Unrealised Profit on Stock

30,000
₹ 60,000 × = ₹ 15,000
1,20,000
Step 6 : Consolidated Profit & Loss

Balance of Statement of Profit & Loss of Ambani Ltd. 16,00,000
Add: Share of Revenue Profit from Adani Ltd. 3,14,400
19,14,400
30
Less: Share of Pre-acquisition dividend

of Ambani Ltd. wrongly credited to Statement of Profit & Loss 1,60,000
17,54,400
Less: Unrealised Profit an Stock 15,000
17,39,400
Step 7: Consolidated Reserve:

Reserve of Ambani Ld. 19,00,000
Add: Share of Revenue Reserve from Adani Ltd. 12,000
19,12,000
Step 8: Consolidation of Other Assets and Liabilities:
Transferred to
Ambani Consolidated
Items Ltd. Adani Ltd. Adjustment Balance Sheet
(-) 1,20,000 (over valuation)
1) Land & Building 20,60,000 7,20,000 + 3,000 (Depre. overcharged) 27,63,000
2) Machinery 6,00,000 5,42,000 11,42,000
3) Other Investments 2,60,000 70,000 - 3,30,000
4) Stock 6,80,000 4,04,000 (-) 15,000 (unrealised Profit on Stock) 10,69,000
5) Sundry Debtors 12,00,000 2,70,000 (-) 1,20,000 (Mutual indebtedness) 13,56,000
6) Current A/c with -
Ambani Ltd. - 40,000 (+) 4,000 (Cash in transit)— 36,000
7) Cash and Cash mutual indebtedness) + 4,000 (Cash
Equivalents 4,00,000 30,000 in transit 4,34,000
8) Current A/c with
Adani 1 td 36,000 - (-) 36,000 (Mutual indebtedness) -
9) Sundry Creditors 2,64,000 3,22,000 (-) 1,20, OOO (Mutual indebtedness) 4,66,000
31
(1) N(6th Sm.)-Financial Reporting etc.-H/DSE 6.1A/CBCS
2020
FINANCIAL REPORTING AND FINANCIAL
STATEMENT ANALYSIS — HONOURS
Paper : DSE 6.1A
Full Marks : 80
The figures in the margin indicate full marks.

Candidates are required to give their answers in their own words
as far as practicable.
Group - A
Answer any two questions. 15×2
1. What are included in a complete set of financial statements as per Ind AS 1? 15
2. Briefly describe different concepts of fund. 15
3. Given, Current ratio = 2.8; Quick ratio = 1.9; Stock turnover (on sales) = 3 months and
Sales = ` 36,00,000. Find the value of current assets and current liabilities assuming no overdraft and
prepayments. 15
4. From the following information, prepare a comparative income statement :
31.03.2019 31.03.2020
Particulars (` ) (` )
Revenue from operations (Sales) 3,75,000 5,25,000
Other Income 20,000 30,000
Cost of Goods sold 3,00,000 3,90,000
Administration Expenses 1,25,000 15,000
Selling and Distribution Expenses 10,000 15,000
Income Tax 30% 30% 15
Group - B
Answer any two questions. 25×2
5. (a) Differentiate between Traditional and Modern Approaches to financial statement analysis.
Please Turn Over

N(6th Sm.)-Financial Reporting etc.-H/DSE 6.1A/CBCS (2)
(b) From the trend percentages supplied below, prepare a comparative statement of Current Assets in
absolute value taking 2016 as the base year.
Trend Percentage Corresponding Value of Current Assets
2017 2018 2019 2019 ( `)
120 130 150 7200 — Cash at Bank
130 140 200 13600 — Debtors
160 220 250 8000 — Finished Goods
175 250 300 9000 — W.I.P.
110 150 175 3500 — Raw Materials 12+13
6. From the Balance Sheets of H. Ltd. and S. Ltd. and the Notes as at 31.03.2020, following balances and
information are available :
Particulars H. Ltd. S. Ltd.

( `) ( `)
Equity Share Capital (` 10 each fully paid) 8,00,000 3,00,000

General Reserve 2,00,000 80,000
Trade Payables 2,80,000 70,000
Balance of Profit and Loss Statement 2,50,000 1,00,000
Land and Building 6,00,000 3,20,000

Plant and Machinery 4,00,000 1,00,000
Investments (24,000 shares in S. Ltd.) 2,80,000 –
Trade Receivables 1,60,000 80,000
Stock 60,000 40,000
Cash and Bank 30,000 10,000
Additional information :
(a) H. Ltd. acquired 24,000 Equity Shares of S. Ltd. on 01.04.2019 at a cost of ` 2,80,000 and
immediately after acquisition, H. Ltd. received dividend from S. Ltd. on equity shares @ 20% for
the year 2018-19 and credited the amount to its Profit and Loss A/c.
(b) On 01.04.2019 S. Ltd. had ` 50,000 in General Reserve and ` 80,000 in Profit and Loss statement.
(c) Goods were sold by H. Ltd. to S. Ltd. at cost plus 25% and stock of S. Ltd. includes ` 10,000 of
such goods.
You are required to prepare the Consolidated Balance Sheet of H. Ltd. with its subsidiary S. Ltd.
as at 31.03.2020. 25
(3) N(6th Sm.)-Financial Reporting etc.-H/DSE 6.1A/CBCS
7. Given below is the summary of assets and liabilities of Speed Ltd. as at 31.03.2019 and 31.03.2020
(in `) :
Liabilities and Equities 31.03.2019 31.03.2020

( `) ( `)
Equity Share Capital (` 10 each fully paid) 4,00,000 4,80,000

Balance of Statement of Profit and Loss 3,00,000 3,90,000
Long-term Borrowing 3,80,000 3,40,000
Trade Payables 1,70,000 1,25,000
Provision for Tax 50,000 55,000
TOTAL 13,00,000 13,90,000
Assets 31.03.2019 31.03.2020

( `) ( `)
Plant, Property and Equipment : Tangible 7,00,000 8,00,000

Stock in trade 2,20,000 1,40,000
Trade Receivables 2,30,000 2,80,000
Cash and Bank 1,50,000 1,70,000
TOTAL 13,00,000 13,90,000
(a) Tangible asset costing ` 1,00,000 (accumulated depreciation ` 70,000) was sold for ` 42,000 and the
profit or loss transferred to Profit and Loss A/c. Depreciation charged during the year on tangible
assets was ` 1,10,000.
(b) Income tax and Dividend paid during the year were ` 58,000 and ` 66,000 respectively.
You are required to prepare the Fund Flow Statement of Speed Ltd. for the year ended 31.03.2020.
25
Please Turn Over

N(6th Sm.)-Financial Reporting etc.-H/DSE 6.1A/CBCS (4)
8. From the following information of a company, prepare a Cash Flow Statement as per AS 3 for the year
ending on 31.03.2019.
Particulars 31.03.2018 31.03.2019
(` ) (` )
I. Equity and Liabilities :
1. Shareholders’ Fund
(a) Share Capital (Equity Shares of ` 100 each) 15,00,000 15,00,000
(b) Reserve and Surplus 13,00,000 15,00,000
(Statement of Profit and Loss)
2. Current Liabilities 10,00,000 6,00,000
38,00,000 36,00,000
II. Assets :
1. Non-current Assets
Property, Plant and Equipment 15,00,000 18,00,000
2. Current Assets
Inventories 6,00,000 3,00,000
Cash and Cash equivalents 2,00,000 5,00,000
38,00,000 36,00,000
(a) During the year the company paid ` 2,00,000 as dividend.
(b) During the year one plant, whose book value was ` 1,00,000 was sold at a loss of ` 25,000 and the
company purchased plant for ` 6,00,000. 12+7+6
9. From the following information, prepare a Statement of Proprietors’ Fund with as many details as possible:
• GP ratio = 25%
• Current ratio = 1.5
• Stock to Current Liabilities = 1/2
• Stock turnover ratio (based on cost) = 73 days [assume, 1 year = 365 days]
• Fixed assets to Net worth = 0.80
• Debtors turnover = 4 times
• Gross profit = ` 3,00,000
• Reserve to Share Capital = 1/3 25
10. (a) What do you mean by financial statement analysis? Discuss three objectives of financial statement
analysis.
(b) State the limitations of ratio analysis. 13+12
R(6th Sm.)-Financial Reporting etc.-
H/DSE-6.1A/CBCS
2021
FINANCIAL REPORTING AND FINANCIAL STATEMENT ANALYSIS — HONOURS
Paper : DSE-6.1A
Full Marks : 80
The figures in the margin indicate full marks.

Candidates are required to give their answers in their own words
as far as practicable.
Group-A
Answer any four questions.
1. From the following data relating to two companies, prepare Common Size Income Statements for the year
ended 31-03-2021 and state which of the companies is having (i) relatively lower ‘cost of goods sold’ and
(ii) relatively lower ‘cash operating expenses’. 8+2
(figures are in ’000 `)
Sika Ltd. Zika Ltd.
Sales 16,000 9,500
Other income 300 200
Total (A) 16,300 9,700
Cost of goods sold 11,520 6,500
Cash operating expenses 2,400 1,700
Total (B) 13,920 8,200
EBDIT [C=(A–B)] 2,380 1,500
2. Following particulars are made available to you: 7+3

 EBIT for the year 2020-21 ` 92,000 and Rate of Income Tax 25%
 12% Debenture ` 1,00,000
 Share Capital on 31.03.2021:
10% Cumulative Preference Shares of ` 80,000 and
10,000 Equity Shares of ` 10 each fully paid
Calculate EPS when—
(a) No equity shares were issued during the year
(b) 2,400 equity shares were issued on 30-11-2020.
Please Turn Over

H/DSE-6.1A/CBCS (2)
3. Complete the following statement showing increase or decrease in working capital: 10
Effect on Working
Balance of Current Assets & 31.3.2020 31.3.2021
Capital
Current Liabilities
` ` `
Inventory 50,000 ? 8,000 (increase)
Trade receivable ? 28,600 7,900 (decrease)
Prepaid expenses ? 3,900 3,600 (increase)
Advance to suppliers 12,000 ? 2,700 (increase)
Cash & Bank 21,700 18,300 ?
Trade Payables ? 15,300 2,700 (increase)
Outstanding expenses 4,900 ? 400 (decrease)
Advance from Customers 7,600 Nil ?
Working Capital ? ? —
4. What do you mean by financial statement analysis? Why such analysis is required? Mention five parties who
are interested in such analysis. 2+3+5
5. Calculate the average collection period from following details taking 365 days in a year: 10
Average inventory ` 2,73,750
Balance of Receivables: Opening ` 2,80,000 and Closing ` 3,04,000
Inventory turnover ratio (based on cost) = 2 months
G.P Ratio = 10% and Credit sales to Total sales = 80%.
6. What do you mean by accounting ratio? What are its limitations? 3+7
7. Find the sales of the base year and other missing data from the following figures of Zap Ltd. 10
Year 2016 2017 2018 2019 2020

Sales (` ’000) 47,200 ? 63,200 72,800 ?
Trend (%) 118 134 ? ? 213
8. (a) State the assets to which Ind AS16: Property, Plant and Equipment does not apply.
(b) What are the conditions need to be satisfied in order to recognise the cost of an item of property, plant
and equipment as an asset?
(c) Define carrying amount and depreciable amount as per Ind AS 16. 4+2+4
(3) R(6th Sm.)-Financial Reporting etc.-
H/DSE-6.1A/CBCS
Group-B
Answer any two questions.
9. Following are the liabilities and assets of Amrapali Ltd. as on 31.03.2020 and 31.03.2021: 20
31-3-20 31-3-21
(`) (`)
I. Equity and Liability:
1. Shareholders’ Fund:
(a) Equity share ` 10 each fully paid 8,00,000 10,00,000
(b) Reserves and Surplus:
Securities Premium 1,00,000 1,20,000
Profit and Loss balance 2,20,000 2,96,000
2. Non-Current Liabilities:
Bank Loan 4,20,000 4,60,000
Trade Payable 1,66,000 2,16,000
Provision for tax 2,00,000 2,10,000
Total 22,66,000 27,42,000
II. Assets:
(a) PPE: Tangible 17,00,000 20,60,000
(b) Non-current Investment 96,000 1,24,000
2. Current Assets:
Inventory 2,40,000 2,30,000
Cash & Cash equivalents 70,000 88,000
Total 22,66,000 27,42,000
Additional information:
(a) Dividend paid during the year ` 75,000
(b) The company sold part of the fixed assets for ` 24,000 (WDV ` 20,000). Depreciation charged on fixed
assets during the year ` 1,40,000
(c) Interest on Bank Loan accrued and paid during the year ` 24,000
(d) Income tax provided during the year ` 1,98,000.
You are required to prepare the cash flow statement of Amrapali Ltd. for the year ended 31-03-2021.
H/DSE-6.1A/CBCS (4)
10. From the following information of Mr. Talapatra, prepare a Trading A/c, Profit & Loss A/c for the year
ended on 31.12.20 and a Balance Sheet as on 31.12.20: 6+6+8
1
Gross Profit Ratio 33 %
3
Net Profit 25% of turnover
Stock Turnover Ratio 10 times
Current Liabilities/External Liabilities 1
4
Fixed Assets/Closing Capital 5
4
Closing Capital/External Liabilities 1
2
Fixed Assets/Current Assets 5
7
Fixed Assets ` 40,00,000
Closing stock is ` 4,40,000 which is 10% more than the opening stock.
11. From the Balance Sheets of H Ltd. and S Ltd. as at 31.3.2021, and the Notes on accounts thereon, following
information are made available to you: 20
Particulars H Ltd. (`) S Ltd. (`)

Equity Share Capital (of ` 10 each fully paid) 10,00,000 5,00,000
Balance in Statement of Profit & Loss 7,00,000 5,00,000
Trade payables 5,00,000 6,00,000
24,00,000 19,00,000
Investment (30,000 equity shares in S Ltd.) 4,00,000 —
Inventories 3,00,000 4,00,000
Cash and Bank 2,00,000 1,00,000
24,00,000 19,00,000
(a) H Ltd. acquired 30,000 equity shares of S Ltd. on 01.04.2020 at a cost of ` 4,75,000. On September 15,
2020, S Ltd. declared 25% dividend for the year 2019-20 and H Ltd. credited the receipt of dividend to
its Investment Account.
(b) On 01.04.2020 S Ltd. had ` 2,00,000 in General Reserve and ` 3,25,000 in Profit and Loss (Cr.).
(5) R(6th Sm.)-Financial Reporting etc.-
H/DSE-6.1A/CBCS
(c) Trade payables of S Ltd. include ` 1,20,000 for purchase of goods from H Ltd. on which H Ltd. made a
profit of ` 30,000. Inventories of S Ltd. includes ` 40,000 of such goods.
You are required to prepare the Consolidated Balance Sheet of H Ltd. with its subsidiary S Ltd. as at
31.03.2021.
12. The summarised Balance Sheets of KPC Ltd. as at 31.03.2020 and 31.03.2021 were as follows: 20
31.03.2020 31.03.2021
Equity and Liabilities
(`) (`)
Equity Share Capital (` 10 each) 3,00,000 4,00,000
Balance in Statement of Profit and Loss 80,000 1,50,000
12% Term Loan 1,00,000 —
Trade Payables 1,25,000 1,10,000
Provision for Tax 65,000 90,000
TOTAL 8,00,000 9,80,000
Assets 31.03.2020 (`) 31.03.2021 (`)

Investments 75,000 40,000
Inventories 1,46,000 2,16,000
Prepaid Expenses 15,000 32,000
Cash and Bank 19,000 40,000
TOTAL 8,00,000 9,80,000
(a) Investment costing ` 35,000 were sold at a loss ` 7,000 (the loss is transferred to Profit and Loss
Account).
(b) Interest received on investment during current year amounted to ` 10,000.
(c) Income tax and dividend paid during the year were ` 85,000 and ` 40,000 respectively.
(d) 12% Term Loan was repaid in full at the beginning of the year 2020-21.
(e) Depreciation charged during the year on land and building and plant and machinery were ` 20,000 and
25,000 respectively.
You are required to prepare the Fund Flow Statement of KPC Ltd. for the year ended 31.03.2021 showing
the changes in the working capital.

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The Bhawanipur Education Society College

4. Things not to forget 3

5. Cash Flow Statement 4-9

6. Fund Flow Statement 10 - 13

8. Financial Statement Analysis 21 – 22

10. Past 2 Years Papers

Financial Reporting and Financial Statement Analysis

Things not to forget in Your Exam:

Cash Flow Statement

P/L A/c as on 31.03.21 - ₹ 2, 30, 000

Statement Showing Calculation of Operating Profit

(a) Total Sales ₹ 4,23,000

Particulars Amount Amount

Particulars Note 31.03.2021 31.03.2022

2. Property, Plant & Equipment – Tangible Assets:

Particulars Amount Amount Amount

Payment of Interest on Debenture 22,400

Dr. Machinery Account Cr.

Dr. Provision for Depreciation Account Cr.

Dr. Non-Current Investment Account Cr.

Dr. 8% Debentures Account Cr.

Dr. Machinery Account Cr.

Particulars Amount Particulars Amount

Fund Flow Statement

Opening balance of Profit & Loss A/c – ₹ 60,000

Closing balance of Profit & Loss A/c – ₹ 30,000

Statement showing Calculation of Fund from Operation

Particulars Amount (₹) Amount (₹)

Fund from Operation 90,000

Particulars 31.03.2021 31.03.2022

a. The schedule of changes in working capital from 31.03.2021 to 31.03.2022 and

Particulars 31.03.2021 31.03.2022 Effect on Working Capital

Fund Flow Statement

For the year ended: 31.03.2022

Sources Amount (₹) Applications Amount (₹)

Dr. Property, Plant & Equipment Account Cr.

To Balance b/f 17,00,000 By Depreciation A/c 1,40,000

Dr. Non-current Investment Account Cr.

Particulars Amount Particulars Amount

Dr. Provision for Tax Account Cr.

To Balance c/f 2,10,000 By Statement of adjusted Profit

Statement Showing Computation of Fund from Operation

Particulars Details (₹) Amount (₹)

Opening Stock 1,00,000

Credit Purchase – 1.5 times of Cash Purchase

(ii) Calculation of Cash Purchase and Credit Purchase.

or, 2.5x = ₹ 13,20,000

And the amount of Credit Purchase = 1.5 × ₹ 5,28,000 = ₹ 7,92,000

Particulars Note No. Amount (₹)

Particulars Amount (₹)

And Net Sales = Sales – Sales Return

Where, Fixed Assets = Plant and Machinery + Land and Building

= 4.696 i.e. 4.7 times

Where, Working Capital = Total Current Assets – Total Current Liabilities

= ₹ (1,50,000 + 50,000 + 90,000 – 50,000 – 1,00,000)

(i) Liquid Ratio 1.5

Particulars Note No. Amount

I. EQUITY AND LIABILITIES:

Or, 2.5 = CA/CL

Now, Working Capital = CA – CL

Or, 1.5 × Rs 60,000 = Rs 2,00,000 – Stock

Stock = Rs 2,00,000 – Rs 90,000 = Rs 1,10,000

Or, FA = 0.75(FA + Rs 1,20,000)

And Share Capital = Proprietor’s Fund – Surplus